EU slaps EUR 79 m fine on Telefonica, Portugal Telecom

(BRUSSELS) - European Union anti-trust authorities announced
on Wednesday a fine of 79 million euros ($105 million) against
Telefonica and Portugal Telecom for breaching EU competition rules in
Portugal and Spain.

The European Commission said it had slapped a
fine of 66.9 million euros on Telefonica and 12.3 million euros on
Portugal Telecom "for agreeing not to compete with each other on the
Iberian telecommunications markets."

The EU executive said that
the breach occurred after the July 2010 acquisition by Telefonica of
Brazilian mobile operator Vivo, until then jointly owned by both
companies, as Telefonica and Portugal Telecom each became the biggest
telecoms operators in their respective countries.

"The parties
inserted a clause in the contract indicating they would not compete with
each other in Spain and Portugal as from the end of September 2010" but
terminated the non-compete agreement in February 2011 after the
Commission opened antitrust proceedings, a statement said.

"We
will not tolerate anticompetitive practices by incumbents to protect
their home markets, as they harm consumers and delay market
integration," said the EU Commissioner for Competition Joaquin Almunia.

Portugal
Telecom said that the fine, of which it has yet to be formally
notified, "is unjustified and inappropriate to any possible unworthiness
of its conduct."

The company said that the clause in question
didn't have the intent or effect to limit competition, that steps were
taken to ensure it didn't and that it was eliminated after several
months.

Portugal Telecom said it would study seeking an annulment
of the fine before the EU's Court of Justice once it had received and
reviewed the decision.

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